Petroleum
products may invite specific excise duty post-APM
Anupama
Airy & Santosh Tiwary
New Delhi, Jan 4: The government is planning a switch
over from the existing ad-valorem excise duty structure for
petroleum products to a specific excise duty regime once the
administered pricing mechanism is done away with from April
1. Under the new mechanism, it is proposed that for the next
fiscal, the government would levy a specific excise duty/CVD
of 32 per cent on petrol and ATF, and a 16 per cent on all other
oil products.
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additional cess for now |
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The decision on levying additional cess
on petrol and diesel for financing the second phase
of the Rs 54,000-crore national highway development
project (NHDP) has been deferred “for the moment.” The
transport ministry has been asked to re-work the revenue
figures likely to be generated from the project so that
fresh estimates of the revenue gap could be made and
a decision on levying additional cess could be taken
accordingly.
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However, for subsidised products like PDS kerosene, domestic
LPG and naphtha for fertilizer and power plants, it is proposed
that the excise duty rates either be zero or at best equivalent
to 8 per cent. “While doing this, the existing prices may
be taken as base for converting the ad-valorem excise duty
rate to specific rates,” a senior government official said.
Alongside, it has also been decided that there should be a
graded specific excise duty structure for diesel, which constitutes
almost 40 per cent of the total consumption of oil products.
Sources also said this new duty structure had been agreed
in principle both by the petroleum and finance ministries,
adding the petroleum ministry would soon seek approval of
the Cabinet for this.
According to sources, the graded specific excise duty rates
on diesel is proposed in order to check the variations in
retail consumer prices in those states which are far off from
the coastal areas. As per the suggested mechanism, specific
excise duty leviable at bonded diesel depots would be reduced
for the depots located away from coastal areas in proportion
to the distance traveled from the pre-designated ports. “The
graded specific excise duty would be decided by the finance
ministry at the time of finalising the next Budget,” sources
said.
On the post-APM customs duty rates, sources said the government
planned to fix a 5 per cent customs duty on crude and 15 per
cent on refined products. Officials also said while subsidised
products like PDS kerosene, domestic LPG and naphtha for fertiliser
and power plants would again have a lower customs duty, but
in no case that duty would be lower than the duty on crude.
Justifying the proposed switch-over to specific excise duty
rates, sources said ad-valorem excise duty structure accentuated
the volatility in the prices of petroleum products, besides
creating anomalies in the applicability of duty on domestic
products vis-a-vis imported products (CVD) in relation to
freight component included in prices. “It is due to these
reasons that the Centre has decided to convert the ad-valorem
excise duty rates to specific rates, for which the existing
prices will be taken as base,” sources said.
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